I stumbled upon John Harper’s blog after he posted a comment on True Gotham. There is some very interesting information on his blog and this fascinating case study on real estate ethics and fraud is especially revealing. It’s an incredible story of someone posing as a rock star to perpetrate fraud.
John seems to have handled this as well as could be expected and fortunately didn’t let his potential commission cloud his judgement in the way the buyer’s agents did. I see this all the time. And may I say that this isn’t exclusive to real estate agents but when you’re talking about big commissions, it happens all too often that agents are counting their money which often short circuits their brains and prevents them from doing the due diligence that they would typically do in any other transaction.
I see agents all the time get so excited about all cash big deals that much of what they have learned or normally practice goes right out the window. Not much different than the guy who provides wiring instructions to the Nigerian Prince who sent him en email. When opportunity seems to be knocking, keep your brains turned on.
Yesterday, I had the pleasure of visiting a couple who are some of my favorite clients. Not because they buy and sell often (I sold them one property in two years and "consulted" with them on the sale of their last property–to their neighbor) but more because they are just really good, solid, and honest people. They’re a lot of fun too!
They are still in the process of settling down in their new space and are finding themselves not as happy as they had hoped with the property. The space is phenomenal, but the light and views pale in comparison to the stunning midtown views they had in their previous apartment. They are also still in the process of decorating, furnishing, and generally making the space their own.
But there is no denying that buyer’s remorse has defintely set in.
So what to do? Well, I myself had buyer’s remorse for at least two months in 2000 when my wife and I purchased a two bedroom co-op. I was feeling that we were paying way too much for 1,200 square feet. The combination of an insanely paced real estate market, the co-op application process (it was brutal!) and the fact that I didn’t feel like I "got a deal" even though I was in the industry was incredibly depressing.
After a few months when the last boxes were unpacked, family photos were displayed, everything was painted and all our furniture had arrrived, the apartment felt more like home and the remorse passed. I wish that had been my only experience. In 2003, we purchased our current apartment and were involved in a bidding war that was covered in a two-page spread in the New York Post entitled "Buyer Shootout!"
The angle of the story was that even someone with many years experience in the real estate industry is subject to the same rules of bidding in an insane market. Now fortunately, my knowledge paid off and we "won" the bidding war, but I am here to tell you that it didn’t feel like I "won" anything!
The remorse set in immediately after our offer was accepted and continued for months after we closed on the property. But again, it eventually passed as we settled in and made the space our home. I’m certain that the remorse would have been less likely to pass had our apartment not appreciated so much in such a short time which leads me to those who have buyer’s remorse in today’s market.
With latest stats reporting appreciation of roughly 6% for 2006, most are still watching the value of their homes increase but certainly not at the pace that we have seen over the past several years. And of course, some who bought in the summer lull of 2006 actually got decent "deals" on their homes much like the couple I begain this post speaking about. They purchased their home from a divorced couple with literally billions of dollars who had already moved out and just wanted the place sold ASAP. My buyers were the beneficiaries of this situation and purchased the home for at least 7-10% below market in my opinion (not a regular occurance at all).
That said, when I informed them yesterday that I thought they could sell for about 10-12% above their purchase price, some of that remorse seemed to dissipate immediately. I also informed them that if they were going to sell (and I DON’T think they should), they should begin marketing immediately as the first 3-6 months of 2007 are likely to procure the best buyer at the highest price. The summer months typically slow a bit when it comes to the larger family apartments and I think they would be less likely to get the same price then. My advice to them… move in completely, paint, furnish, and decorate to their liking and re-evaluate once they have made the home "theirs." Then if they want to sell, the place will be aesthetically more appealing anyway and their design taste (very neutral) will only serve to improve the value of their home. I sincerely hope they end up loving the place because that is always my objective.
I would love to hear stories from TrueGotham readers of buyer’s remorse and hopefully the passing of that horrible feeling.
Phil Thomas Di Giulio of Wellcome Mat was nice enough to provide video:
Watch the interactive video on WellcomeMat.com
UPDATE: I should also mention that this video was shot by Rudolph Bachraty from Sellsius who was nice enough to let us post it here.
That’s what he says. I can’t speak for the local markets across the country, but the Manhattan market has heated up yet again and seems to be supporting the “anomaly theory” that many in the industry and the media would like everyone to believe.
(An aside… Hotpads has a nice photo. Maybe the crew of Patrick.Net installed as the place to install the alleged bullsh*! of all the "Realtwhores.") (Anyone here remember that episode of Scrubs?)
In fact, The Observer wrote yesterday comparing the NYC real estate market to the subway system . The idea is that regardless of price, people have to keep riding. An interesting analogy, but not entirely true. The last quarter of 2006 was indeed a busy one and 2007 has come in like gangbusters.
But I’m not buying the 4th quarter 2006 stats that were reported. I think that New York City is made up of such a plethora of micro markets ranging from the $200k Studio to the $45 million penthouse, that it is very hard to make sense of the numbers when all of these properties are grouped together. There is no denying that those lucky enough to get recent Wall Street bonuses are shopping. The recent activity has also inspired other buyers, who had been on the sidelines waiting for a big market "dip," to come out of their shells.
At the same time, the single most important factor that is buoying our local market is the fact that most sellers have become much more realistic about pricing. The days of “pick a price any price” and it will sell are long gone. And although an environment of multiple bids is among us again, it is NOT the environment that we experienced over the past few years where purchasers were paying large amounts over the asking price and conceding to a seller’s every request. Buyers are acting with much more trepidation and cautiously proceeding by making sensible offers despite other interest. Many buyers are feeling that if they don’t procure one apartment, another will become available in the near term. Some are very comfortable walking away or not even making an offer when they hear that someone else has bid.
Of course, if more than one buyer wants an apartment, the seller has some leverage… but not as much as they once had. The current market although busy again seems much more traditional both financially and psychologically with both buyers and sellers making concessions to reach a meeting of the minds. The housing “slump” that many of us anticipated seems to be evading us for now which leads me to label our current market as… Slumpalicious!
I had a great time participating on the blogging panel at Inman’s RE Connect Conference and although Kevin from 3 Oceans reported from the second "end of the day” session that it was only half full, the afternoon session was standing room only, and a lot of people asked some great questions.
Kudos to Noah at Urban Digs, Joe from Sellsius, and Richard from Real Blogging Systems.
I actually half jokingly suggested that I should have brought a note pad myself because I learned a lot from these guys. They are truly “raising the bar” in the Real estate industry and I’m loving it! It was such a pleasure actually meeting guys face to face like Kevin Boer, Patrick Kitano of Transparent Real Estate, Joel Burslem of FutureofRealEstateMarketing.com and Phil Di Giulio of WellcomeMat.com. Intelligent guys who are changing our industry for the better.
I will be back tomorrow with something fresh and new and having everything to do with real estate! I leave you with this…”IT IS SOOOOOO BUSY RIGHT NOW!!!!”
- Zillow’s new message to real estate professionals: buy an ad on Zillow! Jeff Somers writes about what president Lloyd Frink has been explaining at the conference: "We’re calling it EZAds – and it’s pretty simple – an easy, online way for individual agents and other real estate professionals to buy and customize ads on Zillow.com, targeted to specific searched ZIP codes. The ads show up on ZIP code-specific areas throughout the site, including map pages and home detail pages. With millions of people visiting Zillow each month, most being homeowners (86% of Zillow users own a home) plus buyers and sellers (54% plan to buy/sell in the near future), EZAds will be a lot more targeted than a flyer or traditional offline advertising. And we think you will find pricing a lot more affordable, too. When creating your ads, you can choose the ZIP code, what your ads will look like and where your ads will link to."
- Glenn Kelman of Redfin and Allan Dalton of Move.com made some fireworks in a battle about reduced commissions. Kelman blogs about how it went, from his point of view: "The moderator, Brad Inman, asked if Redfin had faced opposition from the industry; we said yes, acknowledging that sometimes we’ve made it worse for ourselves by stoking the controversy. Brad asked how Redfin could do better at negotiating a $2-million deal in the Berkeley Hills than a superstar agent: we told him we could do $40,000 better (but not that coherently). The battle was joined. Allan and I wrangled over whether we could cost the customer more by screwing up the deal. I said the most basic premise of Redfin’s business is that we have to be the best, not the cheapest. It was an aspiration that seemed to settle Allan and the crowd; it’s something we all understand. Then Redfin antagonized everyone by saying that what’s wrong with the industry is the commission structure that pressures agents to pressure clients, and the desk fees that pressure brokerages to recruit more agents than the market needs. If we don’t reform ourselves, and take out all the sales baloney too, people will come to hate real estate agents the way they hate tobacco companies or Big Oil. Then it was over. Many people afterwards congratulated me, for nothing in particular, which was very kind. The floor cleared, and I started to chat with a New York board member whom I rarely see but was eager to impress. "How’d you do?" he said. A Hamptons broker with a magnificent head of hair and a Bluetooth embedded in his ear interrupted us to say, confidently and happily, that I had bombed."
- Sellsius has photos and video of nearly everything, and word that the next fronteir for Zillow is rentals, possibly to be followed by commercial.
- There is an official blog of the conference.
- Doug will be speaking at two blogger’s roundtables this afternoon. Starting at one, you can also see the vaunted TrueGotham mini parked at the entrance to the Marriott Marquis. The first fifty to visit Jen at the mini will also be given free copies of that most precious of items for a New York City conference-goer: a Zagat’s guide to the city’s restaurants. UPDATE: Not true! The mini is not there! We had arranged with the hotel ages ago to park the car there, but at showtime the people from Inman wanted thousands for the privelege, so, alas, it’s off. We’re hoping to work out a plan B. Stay tuned. UPDATE TO THE UPDATE: Jen has secured a spot for the mighty mini outside Starbucks on 47th and Broadway. Go see her for your 2007 Zagat’s guide complete with a crisp $20 bill to help pay for that next lunch or dinner! Take a right out of the main hotel entrance, and you’ll see that mini at the next corner.
That smell in Manhattan yesterday? Still no real explanation, although many believe it to be a chemical known as mercaptan–which is the additive that makes natural gas stink. A helpful biologist from Kansas left this comment on a New York Times blog: "Mercaptoethanol is affectionatley called ‘Fart in a bottle’ among molecular biologists." Those comments include myriad theories–ranging from the absurd to the terrifying, for instance that was the smell of the Jets and Giants returning home to terrorists released the smell to learn how gasses travel in Manhattan. Plenty of people took issue with the mayor’s assertion that while he didn’t know what caused the smell, he was confident it was not dangerous. The New York Post pins the blame on New Jersey swamp gas.
This morning shortly after my wife left the apartment to take my son to school, my 2 ½ year old daughter said, “it smells like fire in here daddy.”
It indeed smelled like gas throughout our entire apartment on the Upper West Side of Manhattan. At 8:30 we left the apartment to take her to school and everyone was discussing the foul odor of natural gas that was permeating our apartments as well as the air outside. My wife called from midtown to say that her building was also filled with a gaseous odor. Much of the island of Manhattan from Battery Park to the Uptown wreaks of gas.
The most disconcerting element here is that NO ONE can tell us where this odor is coming from and even worse, what the odor is. Now everyone in the city is going about their business and acting as if there is nothing really to worry about (and that is likely and hopefully the case) but the fact remains that in this post 9/11 world that we live in, a gaseous odor permeating Manhattan and Jersey City is a bit troubling. Curbed has a post this AM with more than 50 comments from its readers and no one seems to be able to elucidate. Never a dull moment in NYC!
In the early 1990s I was an NYU student living in the East Village. I went to see a friend’s band play in a basement club. Before the show, the club held a poetry reading, which consisted almost entirely of anti-white male poetry. It was hard core. Like ten or twelve poems in a row at one point.
As it happened, my friend Jason and I were pretty much the only white males in the room, and sympathetic as we were to the overall cause of equal rights, it was just a little unnerving. We definitely got some "how dare you" stares.
At that point, Jason leaned over to me and said "All I got to say is, if I have it so great, how come I’m living on Attorney Street?"
It was a killer line. Because Attorney Street was miserable. The second you crossed Houston Street, heading south, it was all about heroin. "Body bags, body bags, body bags" the dealers hissed as you made your way through the sprawled junkies. No cars, no kids. I swear there weren’t even pigeons. There was only one sign of life–or, indeed, source of street light, on Jason’s block. That was a deli whose owner, at the time of Jason’s comment, had recently been fatally shot on the job.
That was the Lower East Side then. But this is now.
Consider Ginia Bellafante’s description of the Lower East Side’s Essex Street Market (from The New York Times):
A few weeks ago Paradou, a restaurant in the meatpacking district, opened a takeout shop in the market. It joins Formaggio, an outpost of a specialty shop in Cambridge, Mass., and Saxelby Cheesemongers, which arrived earlier this year, started by a winsome 25-year-old former art student named Anne Saxelby. Ms. Saxelby apprenticed on a dairy farm in the Loire Valley after graduating from college. What sort of person might shop at an artisanal cheese counter, one whose name seems borrowed from ”The Chronicles of Barsetshire”? It is easy to envision the cliché and yet Ms. Saxelby’s customers do not conform to it. Among the predictable lot of young downtown mothers who swaddle their infants in hemp are aging Hispanic women, one of whom, Ms. Saxelby explained, comes in a few times a week specifically to buy a cheese called Ascutney Mountain. Jehovah’s Witnesses seem to find their way to her as well.
”There are people from the housing projects across Delancey who come in for milk religiously,” she said. (Ms. Saxelby’s comes from a small dairy in upstate New York and she sells it for $2.99 a quart.) ”This tosses out all your assumptions about who people are and what they are going to like,” she added. ”You don’t know who anyone is, really. Some people who you’d think are young hipsters, artist types, show up with E.B.T. cards,” she said. Ms. Saxelby sells Trillium, a Vermont cheese made from hand-ladled goat curd for $24.99 a pound, and she advertises her acceptance of electronic benefits transfer cards, the replacement for food stamps.
The Essex Street Market exists as an urban planner’s vision of commercial utopia — the sort of retail space now all but non-existent in New York, where increasingly segregated social classes come together to share if not the actual experience of affluence, then the readily purchasable signifiers of it.
(The market, by the way, has a website.)
The Lower East Side has been the very portrait of Manhattan gentrification.
Consider the restaurants alone. Doug lives on the Upper West Side, about as far as you can get from the Lower East Side, and in recent memory has been to several dinners on the Lower East Side, at Inoteca, Pala, Katz’s Delicatessen, Pho Grand, Big Wong, and the Golden Unicorn (dim sum!). His wife and food editor Kate also recommends Falai, Schillers, Little Giant, and wd-50.
Sure, it’s still one of the more affordable neigborhoods. Tenements (Wikipedia: "In the United States, tenement is a label usually applied to the less expensive, more basic rental apartment buildings in older sections of large cities. Many of these apartment buildings are ‘walk-ups’ without an elevator, and some have shared bathing facilities, though this is becoming less common.") are such a core part of Lower East Side real estate that the neighborhood has a tasteful museum to them.
The Lower East Side so happening these days, however, that some condominium developments that are technically in the (once much more popular) East Village are now touted as being on the Lower East Side. For instance in some listings the new development at 296 East 2nd Street is Lower East Side, even though anything north of Houston Street has long been considered East Village. (See map.)
If real estate projects, and how they are marketed, is any measure, the Lower East Side has thoroughly arrived. The website of 115 Allen Street, for instance, brags: "There’s no doubt about it, the Lower East Side has become one of the most sought after places to live and real estate has been revitalized in a way no one expected." And there are dozens of big dollar developments, including 188 Ludlow, 153 Bowery, 7 Essex Street, The Switch Building at 109 Norfolk Street, 62 Rivington Street, Blue at 105 Norfolk Street, and, yes, even little Attorney Street now has a new condo development with a website that crows about how great the neighborhood is. Now that’s progress.
